BoG ‘secretly’ bailing out some banks- Isaac Adongo alleges

Contrary to claims by Vice President Dr Mahamudu Bawumia that bailing out ailing banks through liquidity is no more the way to go in strengthening the banking sector, the Member of Parliament (MP) for Bolgatanga Central Constituency, Isaac Adongo says the Nana Addo led administration is still bailing out some banks by offering them liquidity support.

As part of the BoG’s clean-up of the financial sector which began in August, it revoked the licences of nine universal banks, 347 microfinance companies of which 155 had already ceased operations, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.

The move according to government and the Bank of Ghana has become necessary due to the risk weaknesses in the financial sector poses to depositors and the sector.

Though the collapse of some of the financial institutions has been described by some financial analysts and a section of Ghanaians as high-handed, the BoG maintained that bailing them out as was done under the previous administration was not a prudent way to deal with the situation.

However, the NDC MP for Bolgatanga Central constituency and member of the finance committee of parliament Isaac Adongo says liquidity support is still being giving out to some banks.

“Since 2017, and as late as 2018, Bank of Ghana has been injecting a lot of liquidity support to ailing banks, including so called recapitalised banks after wasting GHc21 billions of tax payers money on collapsing banks. In 2018, GCB received in excess of GHc1 billion of liquidity support from BOG. In the last quarter of 2018, BOG lent over Ghc3.6 billion in liquidity support to CBG after spending over GHc8.05 billion on this same bank through paid up capital (GHc450 million) and corporate bonds of (Ghc7.6 billion) to be paid by the taxpayer” he said in an article seen by Mynewsgh.com.

He intimated that despite the collapse of some banks for failing to meet the minimum capital requirement of Ghc400 million, coupled with other financial institutions management breaches, the central bank under the current governor is still extending huge sums of liquidity support to banks.

While citing the NIB and ADB as banks that are being targeted for takeover by private persons through the Ghana Amalgamated Trust (GAT), Isaac Adongo wrote “it has become clear that the President is bent on stealing NIB and ADB through the bank door by illegally doling out tax payers money to GAT to buy our own banks and place them privately with his cronies”.